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Barbara Schnell Adfiap

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					34th ADFIAP Annual Meeting
April 20 to 23, 2011, North Cyprus
“Responding to Global Issues & Trends:
The Strategic Role, Resources and Relationships of
National Development Finance Institutions”


DFIs and SME Finance:
Building Capacity for SME Development
and Innovative Financing Mechanisms


“Advisory Support for SMEs during their Life Cycle”


Barbara Schnell, Division Chief
Financial and Private Sector Asia
Agenda



 1   KfW Bankengruppe: Overview


 2   Global Challenges


 3   Finance and Advisory Support during the Life Cycle of SMEs


 4   KfW’s Advisory Support for SMEs


 5   Conclusions




                                                                  2
60 Years of KfW
Financing with a Public Mission


                                  ● Promotional bank of the Federal Republic
                                    of Germany
                                  ● Founded in 1948 as Kreditanstalt
                                    für Wiederaufbau
                                  ● Shareholders: 80% Federal Republic,
                                    20% federal states
                                  ● Headquarters: Frankfurt am Main
                                    Branches: Berlin and Bonn
                                  ● Representative offices: around 70 offices
                                    and representations worldwide
                                  ● Balance sheet total at end 2010:
                                    EUR 441,8 billion
                                  ● Financing Volume 2010: EUR 81.4 billion
                                  ● Around 4,530 employees (2010)
                                  ● Best rating: AAA/Aaa/AAA


                                                                                3
  A Bank with a Wide Array of Functions




                  Domestic promotion                                      International business
We promote the German economy                                   We ensure              We promote
                                                                internationalisation   development
  Business Area         Business Area        Business Area                                 Business Area
   SME Bank           Private Client Bank    Municipal Bank         Business Area
                                                                  Export and Project       Promotion of
                         Promotion of            Municipal              Finance           Developing and
Promotion of SMEs,                            infrastructure                            Transition Countries
                         construction                                International
 business founders,                            projects and
                        of new housing                                project and            Promotion of
      start-ups                               global loans in
                       and modernisation                            export finance          developing and
                      as well as education   Germany/Europe                               transition countries


               Funding 2010: 64.3 bn EUR                           Funding 2010:           Funding 2010:
                                                                    9.3 bn EUR              5.7 bn EUR

                             Promotion of environmental and climate protection: 25.3 bn




                                                                                                             4
Agenda



 1   KfW Bankengruppe: Overview


 2   Global Challenges


 3   Finance and Advisory Support during the Life Cycle of SMEs


 4   KfW’s Advisory Support for SMEs


 5   Conclusions




                                                                  5
 Global Challenges



             Poverty Reduction
                                              Climate Change


                                                               Shortage of Resources
                    Sustainable Economic Growth /
Framework                  Pro-Poor Growth
Conditions

  Good       Global Division     Income Distribution
                of Labour
Governance
                                                         Population Growth
  Peace                                 Structural
               Competitiveness
                                         Changes

                                                     Gender
                                                     Issues        Demographic
                                                                     Change
                         Job creation


                                                                                 6
Role of DFIs


The framework in which promotional banks/ development
banks operate is subject to continuous change due to

● New global challenges/ structural changes to be addressed
● The appearance of new areas of market failures
● The evolution of financial markets
● Changes in governmental economic policy


 Therefore development banks have to engage in a continuous
 process of re-defining their roles, tasks and products.




                                                              7
Agenda



 1   KfW Bankengruppe: Overview


 2   Global Challenges


 3   Finance and Advisory Support during the Life Cycle of SMEs


 4   KfW’s Advisory Support for SMEs


 5   Conclusions




                                                                  8
Advisory Support for SMEs
Consultancy Services Guaranteeing the Success
of SME Promotion


Advisory Support

● supplements KfW’s financing offers for SMEs.

● helps companies to enhance their performance.

● supports KfW’s strategy of sustainable promotional activities
   (e.g. economic sustainability of SMEs, job creation, climate
   protection).

        KfW offers grants in the crucial stages of companies’
             life cycle (start-up phase and crisis) and when
   companies
        face special challenges which require detailed know-how.


                                                                   9
Phases of the Organizational Life Cycle:
Need of Special Advisory Support

                                                                    Finance for
                        Start-up            Growth
                                                                 Special Promotional
                        Finance             Capital
                                                                     Purposes

                   Combination of capital
                                                                                             Turn around
  Profit/ Growth




                                                          Advisory support for
                   and advisory support
                                                      special promotional purposes             advisory
                   (e.g. Venture Capital)
                                                                                               services
                   Separate advisory support




                                                                                                              t

                   Start up-Companies          Growing Companies/                      Mature Companies/
                   Business Founders           Established Companies                   Declining Companies




                                                                                                             10
Agenda



 1   KfW Bankengruppe: Overview


 2   Global Challenges


 3   Finance and Advisory Support during the Life Cycle of SMEs


 4   KfW’s Advisory Support for SMEs


 5   Conclusions




                                                                  11
  Promotional Instruments focussing on SME financing



                                                        KfW

                    Loan Financing              Mezzanine Financing              Equity

                      Start-up Loan                                           Participation in
Financing of      (“KfW Gründerkredit”)         ERP Capital for Start-ups   “High-Tech Founder
Start-ups          StartGeld / Universal                                        Fund” (PPP)

                                                                            ERP Start-up Fund

                 KfW Entrepreneur Loan
                       (Part “A”)               KfW Entrepreneur Loan
Support of                                            (Part “B”)
                 ERP Regional Promotion                                      ERP Participation
young,
                      Programme                                                Programme
growing and                                         ERP Innovation
of established   ERP Environmental and               Programme
companies          Energy Efficiency
                      Programme


                                           Global Loans, Securitization
                                               Advisory Services

                                                                                                 12
KfW’s Promotional Approach:
Companies with a Need of Special Advisory Support
  High-Tech Founder Fund (PPP)
                                                                Special promotional purposes:
     - Companies up to 1 year -
                                                           Energy efficiency advice for SMEs
    Equity in combination with
                                                          Initial advice and/or detailed consulting
     strong advisory support

                                ERP Start-up Fund
                         for technology-based companies
    Profit/ Growth




                                                                                                   Round Table
                          Equity and advisory support                            for companies experiencing economic difficulties
                          through Lead-Investor-Model                            (in cooperation with chambers/ external advisors)

                     „Start-up Coaching in Germany“                                          “Turn around” advisory services
                           for business founders/                                            Advice on a company’s economic,
                             business start-ups                                            financial and organizational questions




                                                                                                                             t

                     Start up-Companies           Growing Companies/                          Mature Companies/
                     Business Founders            Established Companies                       Declining Companies




                                                                                                                            13
Early Stage (1)
High-Tech Start-ups:
Combination of Financing and Advisory Support



         High-Tech Founder Fund
          Government, KfW, BASF, Zeiss,
        Daimler, Siemens, Deutsche Telekom




  Founder

                                        Technology
                                          Start-up
  Investor
   Coach

      - Risk Capital       - Management Support

                                                     14
Early Stage (2)
Broad-based Initial Advisory Services for SMEs:
“Start-up Coaching in Germany”




                                                                     Total costs:
    up to 5 years
                                                                   up to 4.000 EUR
   after foundation
                                                                    or 6.000 EUR

                                                                        Grant:
 Consulting Services
                                                                  50%, 75% or 90%
   and Coaching
                                                                    of total costs

                                                                 Special Conditions for
 max. for 12 months                                               starting a business
                                                                 out of unemployment


                       Application via KfW‘s regional partners

                          2010: ca. 29.000 commitments


                                                                                          15
Special Promotional Purposes:
Energy Efficiency Advice for SMEs




    Initial Advice                                                       Detailed consulting


                                                                        In-depth energy analysis of
 Reducing information
                                                                       energy saving measures and
    deficits about
                                                                      investments, savings potential
 energy saving options
                                                                           and cost effectiveness


 Grant: 80% of costs                                                     Grant: 60 % of costs

                                                                          Total consulting costs:
 1 – 2 days of consulting
                                                                             up to 8.000 EUR


                            Application via KfW‘s regional partners

                                2010: ca. 4.800 commitments

                                                                                                    16
Established SMEs with Need for Improvement:
“Round Table” and “Turn Around“ Advisory Services


               Round Table                           „Turn Around“ Advisory Services
Target Group   Advisory services for SMEs            Advisory services for SMEs in economic
               experiencing economic                 difficulties, but with a positive business forecast.
               difficulties owing to unexpected      Analysis of weak points already completed.
               economic developments.

Procedure      External advisors analyses            Implementation of measures:
               the weak points and offers            External advisor coaches the company to cope
               proposals for their solution.         with the identified weak points and to improve
               “Round table” with participation of   and restore the capacity and competitiveness of
               all lenders.                          the company.
Grant          EUR 160 per day of work               50% or 75% of the costs
               for advisor/ project monitor          Max. EUR 8,000
               (max. 10 days)
Partners       Regional partners                     Regional partners
               Chambers of Commerce/                 Chambers of Commerce/ Trade/ Crafts;
               Trade/ Crafts                         Local business development institutions

Commitments    Ca. 2.500                             Ca. 1.700
in 2010

                                                                                                        17
Agenda



 1   KfW Bankengruppe: Overview


 2   Global Challenges


 3   Finance and Advisory Support during the Life Cycle of SMEs


 4   KfW’s Advisory Support for SMEs


 5   Conclusions




                                                                  18
Conclusions


 In addition to pure financing KfW offers a package of advisory
 services accompanying SMEs through their life cycle.

                             KfW offers advisory support in order
                             ● to increase the prospects of success
                               and growth of start-ups
                             ● to support the efficient implementation
                               of KfW financing programmes
                             ● to encourage SMEs to improve their
                               energy savings capacity
                             ● to support SMEs during a (temporary)
                               time of crisis


                                                                         19
Thank you for your attention!



    Barbara Schnell                     KfW Bankengruppe
    Division Chief                      Palmengartenstrasse 5–9
    Financial and Private Sector Asia   60325 Frankfurt am Main

                                        Fon +49 69 7431 – 2205
                                        Fax +49 69 7431 – 2944
                                        barbara.schnell@kfw.de




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